New Trade: Long Yelp ($YELP) & Short Trulia (TRLA)

By: ispeculatornew
Date posted: 02.11.2013 (3:00 am) | Write a Comment  (1 Comment)

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After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with a few solid trades. As of writing this, all 5 of my live trades are profitable with the best one being what I opened last week when I went long LinkedIn (LNKD) which ended up announcing killer earnings. That trade is now up 31%!! I will keep it open a bit more because I continue to believe the potential is strong. You can see live performance of my 2013 picks here:

2013 Long & Short Tech Stock Picks

This is a very interesting trade, no doubt about it. It’s a great example of why I like long and short trading. I’m not a huge fan of either stock. But there’s one that I clearly believe to be undervalued relative to the other so today As I currently have 5 live long & short trades, there are not as many possibilities among the stocks that I follow but this one seemed like a low-risk/high reward type of trade. Both stocks trade at similar prices, are losing money, but they have vastly different profiles otherwise. Before getting started, let’s take a look at the numbers for this trade:

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yelpLong Yelp (YELP)

Obviously, I’m not a huge fan of Yelp simply because I think there is more potential with some of the other social web stocks. That being said, Yelp offers a fairly unique product which is doing very well in this more mobile world.  The company’s reviews have been getting more deeply integrated into other products as well as the Apple O/S which certainly speaks to the possibilities. I do think there will be growth so seeing Yelp trade at a comparable P/E ratio and price to TRLA, a stock that doesn’t have as much going for it screams opportunity.

YELP

YELP Revenue Quarterly YoY Growth Chart

YELP Revenue Quarterly YoY Growth data by YCharts

Next earnings: May 2nd 2013

Short Trulia (TRLA)

I did bash both Zillow and Trulia back in October so it’s probably not a big surprise to see that I’m now short both names. Trulia is basically trading at a similar forward P/E, and even price but I do expect Yelp to continue having stronger revenues and earnings per share as well as have better opportunities for strong growth. Trulia has a product that faces strong competition in a struggling industry (housing), I’m not sure what to get excited about really so going short is a no-brainer.

TRLA

Next earnings:  February 12th 2013

Disclaimer: No positions on YELP or TRLA (position will be opened this morning)

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1 Comment

  1. Comment by Fred@Foxy Finance — February 16, 2013 @ 8:23 am

    If it’s any help my next door neighbour is a saleswomen at Yelp and she is pulling $30k PM in the London office and killing it!

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